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Crisis in American Institutions: Privatizing America

Subsidizing Tobacco

The United States government resorts to subsidizing the tobacco producers as the means of developing the country’s agricultural sector of economy (Skolnick and Currie, 2007, p. 58). The major programs and initiatives taken by the government to assist tobacco producers in their work include, according to Farm Subsidy Database (2009), the programs like Tobacco Loss Assistance for whose purposes $276,503,782 were paid between 1995 and 2006, Tobacco Payment Program that involved over $51,058,535 of spending, and Tobacco Disaster Assistance that amounted to $2,696,981 of governmental subsidies (Farm Subsidy Database, 2009). These subsidies facilitate the tobacco production but cause numerous political and public protests.

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The main reason for the protest, as Skolnick and Currie (2007) argue, is the sharp increase of tobacco smoking related deaths in the USA (p. 162). Public and political organizations tried to stop subsidizing but the answer of the tobacco lobby to this was the statement that tobacco industry is vital for the country’s economy, and without subsidizing this industry will fail causing the failure and collapse of the whole US economy (Skolnick and Currie, 2007, p. 58). Thus, tobacco subsidizing was prolonged for several years, reached its peak in 2000 ($345,123,312) and stopped only in 2005 – 2006 (Farm Subsidy Database, 2009).

Sheltering Income from Taxes

Sheltering income from taxes can prove to be rather important if one takes a closer look at the tax code of the US. Paying all the taxes might leave an individual or a company without funds at all, so both people and corporations use tax shelters to save money formerly spent on taxes (McIntyre, 2005, p. 10). Needless to say, the large corporations and unions of business companies have advantages over individuals in income sheltering procedures. Among those advantages, the power of corporations and the amounts of income sheltered by corporations play the prominent role.

Thus, according to McIntyre (2005), the corporations can succeed more in sheltering their income from taxes due to the fact that they have “tremendous lobbying power in Congress” (p. 10). Based on this, the corporations can achieve making exceptions for the tax payments at the legislative level and save more funds by this step, which is inaccessible to individuals (McIntyre, 2005, p. 11). The second step a corporation can take is to outsource its production. In other words, the corporation can resort to producing goods in one country with high taxes and sells them in a low-tax country, the incomes can be higher than if the corporation would pay high income taxes in its original country (McIntyre, 2005, p. 11). Individuals cannot act in such a wide scope, so their opportunities of income sheltering are narrower.

Campaign Contributions

The nature of the American politics is rather interesting as seeking financial support from outside, non-partisan, individuals or companies (campaign contributions) is open and legal (Skolnick and Currie, 2007, p. 81). However, scholarly evidence exist that proves the fact that the public consideration of campaign contributions and overall financial side of elections leads to the discouragement of voting rates and undermines the beliefs of people in the politicians and ideas they support (Skolnick and Currie, 2007, p. 82).

For instance, Cebula (2007) argues that the “there appears to be strong evidence that PAC congressional election campaign contributions may have also acted to reduce the voter participation rate over the study period” (p. 399). Thus, according to Cebula (2007), people tend to vote less willingly in times of financial and economic prosperity, especially when they openly observe the work of politicians not on improving their lives but on getting money for their election campaigns (p. 400). Accordingly, the relation between campaign contributions’ obtaining and voting discouragement is direct as the former facilitates the latter.

Water Services Privatization

The specificity of the American multinational society has led to the process of privatization in various fields of public economy. Water services sector has been subject to privatization as well, first of all due to the complaints of numerous people about the quality of tap water provided to them (Varghese, 2007, p. 1). The major reasons for the dispute was the inability of municipal and federal authorities to provide proper funding and maintenance to water supplying systems. As a result, according to Varghese (2007), the state authorities chose to allocate water services to private entrepreneurship instead of looking for funds to maintain and update them themselves (p. 1).

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However, the results of the water services privatization cannot be called positive. As Varghese (2007) argues, the current public opinion on water supply is divided between the people who support bottled water use as the way to consume healthier water, and those who are prone to look for means of updating and maintaining the public water supply system (p. 6). Private water service providers are not considered as alternatives as their standards are rated and different for various social income groups of people, while the very providers, as Varghese (2007) notes, are not responsible to the community for the quality of water provided.


Cebula, R. (2007). Pac congressional election campaign contributions and other political or economic influences on the voter participation rate. The American journal of economics and sociology, 66(2), 399-412.

Farm Subsidy Database. (2009). Tobacco Subsidies in the United States. Web.

McIntyre, R. (2005). Tax Cheats & Their Enablers.

Skolnick, J. H., and Currie, E. (2007). Crisis in American Institutions. 13th ed. Boston: Pearson/Allyn and Bacon.

Varghese, S. (2007). Privatizing U.S. Water. Web.

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